VC investment in the Americas was relatively robust in Q4’20, driven primarily by activity in the US, where Resilience, Robinhood, Chime, Relativity Space, and Nuro all raised $500 million+ funding rounds. Quarterly VC investment in Canada remained steady compared to historical norms, while investment in Latin America was driven primarily by Mexico-based Kavak’s $397 million raise in October and a $255 million funding round by Brazil-based Creditas in December12.
Corporate venture capital investment remains high as competitiveness becomes critical
Corporate VC related investment in the Americas grew from $64 billion in 2019 to $71 billion in 2020, an amount just shy of the record $72 billion seen in 2018. As the importance of digital channels and solutions skyrocketed due to the impact of COVID-19 across the region, many corporates were forced to rapidly accelerate their digital transformation agendas in order to remain competitive. Given the importance of speed to market, many corporates were driven to invest in startups with relevant technologies already in play that could help them move forward more quickly than they could otherwise move.
Fintech attracting significant VC investment across the Americas
Across the Americas, fintech continued to be one of the most attractive areas for investment. While fintech has been a critical area of investment for a number of quarters, the global pandemic has increased interest in the sector even further given the increases in e-commerce and the growing demand for touchless and digital payment options.
During Q4’20, a number of US-based companies raised sizeable funding rounds, including Robinhood ($668 million), Chime ($533 million) and Hippo Insurance ($350 million), while Brazil-based Creditas raised $255 million and Canada-based Wealthsimple raised $86 million. In Latin America, payments and lending continued to be the most prominent areas of fintech investment during Q4’20, while in the US and Canada VC investors were attracted to a broader range of fintech subsectors, including insurtech and wealthtech.
Trends to watch for in the Americas
VC investment in the Americas is expected to remain robust heading into Q1’21. In the US, both VC investors and startups will be watching carefully as the administration changes as it will likely signal a shift in priorities. Across the Americas, fintech is expected to remain a very hot area of investment, in addition to delivery and logistics and B2B services.